Wednesday, September 23, 2009

Today was exciting, at least after the Fed statement. The market hit a new high of 1080.15 after the statement but as Kenny pointed out, it was a weak rally. Prices then broke down. In 90 minutes, the S&P 500 lost about 20 points.

Although it is difficult to make out wave patterns, it appears that primary wave [2] topped today. One possibility is shown, but the Dow is really not clear. Perhaps an ending diagonal unfolded, but there is no wedging. As discussed yesterday, wave (b) of [iv] may have topped today, but then [iv] would then seem excessively complex.

Today may have been an important turning point in the market; bullish sentiment may have peaked after the Fed statement. Furthermore, this market continues to be in a weak technical position. Also the Dow Transports peaked 9/17/09 and are not even close to confirming the Dow's high set today, 4 days later. I expect the remainder of September to be very weak if the market did top today. Watch for impulsive waves moving down from today's peak.

As a final note, the S&P 500 has gained 413.36 points since [2] began; 666.79 was the bottom on 3/6/09 and 1080.15 was the high today. This is a 61.99% gain, very close to the inverse of the golden ratio, 0.618.

Today was exciting, at least after the Fed statement. The market hit a new high of 1080.15 after the statement but as Kenny pointed out, it was a weak rally. Prices then broke down. In 90 minutes, the S&P 500 lost about 20 points.

Although it is difficult to make out wave patterns, it appears that primary wave [2] topped today. One possibility is shown, but the Dow is really not clear. Perhaps an ending diagonal unfolded, but there is no wedging. As discussed yesterday, wave (b) of [iv] may have topped today, but then [iv] would then seem excessively complex.

Today may have been an important turning point in the market; bullish sentiment may have peaked after the Fed statement. Furthermore, this market continues to be in a weak technical position. Also the Dow Transports peaked 9/17/09 and are not even close to confirming the Dow's high set today, 4 days later. I expect the remainder of September to be very weak if the market did top today. Watch for impulsive waves moving down from today's peak.

As a final note, the S&P 500 has gained 413.36 points since [2] began; 666.79 was the bottom on 3/6/09 and 1080.15 was the high today. This is a 61.99% gain, very close to the inverse of the golden ratio, 0.618.

My trading philosophy is 95% based on my own Elliott Wave analysis of the S&P 500. I try to keep my analysis and trading as simple as possible and do not use trend lines, channels, or definite retracement, price, or time targets. To me, inspecting the proportionality and symmetry of a market's price structure is the key to mastering the principle; it is through this that low-risk, high-reward trading opportunities are found.

Because they are the only things I look at when trading, the quality of the charts I post on this blog are very important to me. I think you will find my work to be the best Elliott Wave analysis of the S&P 500 on the internet.